Looking to open FNB share account

zdesignzi9250

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Oct 7, 2012
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Hey guys , I'm currently a student at uni and have about 2-3k to invest but I don't know where to start. Some of my requirements are :

-The bank/company must manage my portfolio
- no interest must be earned
- low monthly account fees
- tax free if possible

Would really appreciate some feedback
 

TofuMofu

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Aug 11, 2008
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Hey guys , I'm currently a student at uni and have about 2-3k to invest but I don't know where to start. Some of my requirements are :

-The bank/company must manage my portfolio
- no interest must be earned
- low monthly account fees
- tax free if possible

Would really appreciate some feedback

Why no interest? That's not investing, that's saving.
 

InTheWild

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Sep 4, 2012
Messages
610
Hey guys , I'm currently a student at uni and have about 2-3k to invest but I don't know where to start. Some of my requirements are :

-The bank/company must manage my portfolio
- no interest must be earned
- low monthly account fees
- tax free if possible

Would really appreciate some feedback

Go look at the EasyEquities thread. Prob a good option for you and its cheap. Just stay with ETF's, even just a mix of local top 40 (or new Coreshares top 50 ETF) ETF and one of the DBX tracker for offshore. They have tax free option as well.
 

Pitbull

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That's correct

I only know this as I dealt with a client the other day that has FNB Islamic Banking. They settle on a debt owed similar to interest but it's worked in as something called Profit. So let's say interest owed on a loan is calculated at 15%. They add the 15% on top of the principal debt and call it Profit. But this is on a loan owed to the bank. I don't know how they deal with "Profit" in the client's favour.
 

SauRoNZA

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Well if no interest is to be earned then there is no portfolio to be managed.

So what would be the point of buying any shares then? Just stick it in a regular non-interest bank account.

Also how would you need to pay Tax if you made no interest?
 

Pitbull

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But technically those share accounts shouldn't have interest, correct?

Nope, you should be getting profits/losses based on your investment. And then you also get dividends paid on shares.
None of those are interest no.
 

Pitbull

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Well if no interest is to be earned then there is no portfolio to be managed.

So what would be the point of buying any shares then? Just stick it in a regular non-interest bank account.

Also how would you need to pay Tax if you made no interest?

He can make a profit. He can just not give money expecting interest. It's a broad term and normally wording just sorts it out. This is from my limited understanding though. There are loads of Muslims on this forum that would be able to give more input.
 

SauRoNZA

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He can make a profit. He can just not give money expecting interest. It's a broad term and normally wording just sorts it out. This is from my limited understanding though. There are loads of Muslims on this forum that would be able to give more input.

So basically not allowed to have pre defined guaranteed interest? Has to have risk?

But that's like gambling which they aren't allowed to do either.
 

Pitbull

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So basically not allowed to have pre defined guaranteed interest? Has to have risk?

But that's like gambling which they aren't allowed to do either.

Not at all. As I said, it's a wording thing more than anything else. Again, this is to my limited knowledge, probably best for a Muslim follower to clarify it. This is just the conclusion I got from working on that one Islamic Banking client's portfolio. So if he lends you money he can't get interest on it that accumulates. You both agree on an amount to be paid back and when it needs to be paid back. So if you lend someone R 100 and you agree he's going to pay you back R 120. That 20 is not interest but profit. And he pays you back as per agreement. So if he defaults one month the amount doesn't now become R 125. it's still R 120 and he has till the agreed settlement date to settle it.

Or that is how I think it works anyway.
 

zdesignzi9250

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Oct 7, 2012
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That is exactly how it works , but for those share accounts by no interest what I meant was what ever profits /gains you get must not earn interest for example 5% interest on gains made from your investments ...
 

Pitbull

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That is exactly how it works , but for those share accounts by no interest what I meant was what ever profits /gains you get must not earn interest for example 5% interest on gains made from your investments ...

What you will need is a non interest baring account from a Bank.

Any funds in that account will not accumulate interest. Any funds you remove from your shares will then go to that account and not earn interest. But money invested in shares will win/lose profits as long as it's in that account. Only when you withdraw those funds from that invested shares to an account will they start earning interest. So for that you need a non interest baring account.

Hope that makes sense.
 

zdesignzi9250

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What you will need is a non interest baring account from a Bank.

Any funds in that account will not accumulate interest. Any funds you remove from your shares will then go to that account and not earn interest. But money invested in shares will win/lose profits as long as it's in that account. Only when you withdraw those funds from that invested shares to an account will they start earning interest. So for that you need a non interest baring account.

Hope that makes sense.

Thanks for clarifying , so basically if I open an fnb shares account no interest will be earned on any profits until I move those funds to an actual bank account?
 

Pitbull

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Thanks for clarifying , so basically if I open an fnb shares account no interest will be earned on any profits until I move those funds to an actual bank account?

That is how I understand it. The shares account is money being used on the share market so ALL gains on that money will be profit. It will only start earning interest once you move it to a normal bank account. But to be 100% sure, just chat to someone at the bank. It could be that the specific shares account bare interest on credit balances. If that is the case I would suggest maybe trading your own shares via your interest free account. Buying and selling shares can be done that way and the money not sitting in an account that "might" be earning interest. I'm not too familiar with the shares accounts.

https://www.fnb.co.za/share-investing/shares-faqs-account-opening.html
Do I earn interest on cash balances in my trading account?

Yes, at a rate linked to call account rates -1%.

Looks like you do earn interest. Best would be to trade your own shares via the share trader option on FNB

Maybe something like this:
https://www.fnb.co.za/share-investing/
 
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zdesignzi9250

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Oct 7, 2012
Messages
183
That is how I understand it. The shares account is money being used on the share market so ALL gains on that money will be profit. It will only start earning interest once you move it to a normal bank account. But to be 100% sure, just chat to someone at the bank. It could be that the specific shares account bare interest on credit balances. If that is the case I would suggest maybe trading your own shares via your interest free account. Buying and selling shares can be done that way and the money not sitting in an account that "might" be earning interest. I'm not too familiar with the shares accounts.

https://www.fnb.co.za/share-investing/shares-faqs-account-opening.html


Looks like you do earn interest. Best would be to trade your own shares via the share trader option on FNB

Maybe something like this:
https://www.fnb.co.za/share-investing/

Thanks for everything , I'm looking at the share builder account https://www.fnb.co.za/share-investing/share-builder.html

I want them to select the shares and stuff since im pretty much clueless..

Do you think it's worth it?
 
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